Stocks barely budged on Friday as oil prices fell, and traders kept an eye on Hurricane Rita, which was downgraded Friday afternoon to a category three storm.
The Dow Jones industrial average fell 2.46 points, or 0.02%, to 10,419.59. The broader Standard & Poor's 500 index was up 0.67 point, or 0.06%, to 1,215.29. The tech-heavy Nasdaq composite index rose 6.06 points, or 0.29%, to 2,116.84.
November West Texas Intermediate crude oil prices dropped $2.31 a barrel to $64.19. A weakening in hurricane Rita was responsible for some of the price weakness, though said selling was backed by prospects that crude demand could be greatly reduced as a result of precautionary pre-Rita refinery closures, and expected damage to installations in the aftermath, says Action Economics.
The EIA reported that 5 million barrels per day (bpd) of crude demand has evaporated due to current refinery closures, which amounts to nearly 25% of total U.S. crude consumption of about 20.7 million bpd, says Action Economics. Elsewhere, front-month gasoline shed 8 cents per gallon, though prices remained well supported over the $2.00 per gallon mark, says Action Economics.
Next week's economic calendar includes: existing home sales on Monday, consumer confidence and new home sales on Tuesday, durable goods orders on Wednesday, and the final gross domestic product figures for the second quarter on Thursday. On Friday, the data will be personal income, the PCE index, Chicago PMI, and University of Michigan consumer sentiment. However, most of these reports will reflect economic conditions before Hurricane Katrina.
Among stocks on the move Friday, Oracle (ORCL ) shares fell after the company reported disappointing results. The software maker posted first-quarter earnings per share of 14 cents, vs. 10 cents a year earlier (non-GAAP), on a 31% revenue rise. Oracle posted 10 cents GAAP EPS on 25% GAAP revenue rise. Prudential reportedly downgraded the stock to neutral from overweight.
In other earnings news, Palm (PALM ) posted first-quarter EPS of 35 cents, vs. 38 cents (GAAP), despite a 25% revenue rise. Palm lowered prices on its Treo hand-held device and reduced its earnings outlook.
Aluminum producer Alcoa (AA ) cut its outlook for the third quarter, saying it sees 27-31 cents EPS from continuing operations. It cited lower aluminum prices, higher input costs, particularly for energy and raw materials, and seasonal weakness in Europe and automotive markets.
Linens'N Things (LIN ) shares fell after the retailer warned it expects third-quarter EPS to approximately breakeven on 10% lower same-store sales. Its board is exploring options, including a possible sale. Lehman slashed estimates.
Darden Restaurants (DRI ) shares rose after the chain posted first-quarter EPS of 53 cents, vs. 44 cents, on a 10% total sales rise. It raised its semi annual dividend to 20 cents per share from 4 cents.
There were no major economic reports on Friday. Action Economics predicts the focus will remain on Rita, and attention will turn toward next week's Fedspeak for insights on the one-two punch from Katrina and Rita. Greenspan speaks on the economy on Tuesday.
Treasuries yields bounced on the energy price dip, profit-taking, and indications that China would widen its currency band, says Action Economics. The 10-year note yield jumped to 4.24%.
European stock markets finished higher on Friday. London's Financial Times-Stock Exchange 100 index was up 27.9 points, or 0.52%, to 5,413.6.
Germany's DAX index gained 33.57 points, or 0.69%, to 4,882.58. In Paris, the CAC 40 index rose 29.05 points, or 0.65%, to 4,477.2.
Asian markets finished lower on Friday. Japan's markets were closed for Autumnal Equinox Day.
Hong Kong's Hang Seng index fell 35.98 points, or 0.24%, to 15,143.97. China widened its non-dollar currency band in another step toward eventual yuan flexibility, says Action Economics.